Sanity Prevails: The Tale of a 90% Reduction to a Punitive Damages Award

by Dentons
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In the May 2014 Ontario Court of Appeal decision in the case of Boucher v. Wal-Mart, the $1,150,000 in punitive damages previously awarded to Boucher by a jury was reduced to $110,000. The decision represents a good monetary result for Wal-Mart but it is laced with lessons for employers to keep in mind when faced with allegations of managerial harassment.

The Case:

Boucher was a 10 year Wal-Mart employee at the company’s Windsor store. After a series of promotions and good performance reviews, she was promoted to assistant manager in 2008. The following year, store manager Pinnock began a series of actions intended to harass and belittle Boucher after she refused to falsify a temperature log. Boucher complained to Wal-Mart’s senior management but her complaints were held to be “unfounded” and Boucher was told that she would be held accountable for making them. With her complaints falling on deaf ears and the harassment continuing (often in full view of other assistant managers at the store), Boucher left and claimed constructive dismissal.

The case was tried by a jury and Boucher was awarded damages as follows: (i) $1,200,000 from Wal-Mart, made up of punitive damages of $1,000,000 and aggravated damages of $200,000; and (ii) $250,000 from Pinnock, made up of punitive damages of $150,000 and damages for intentional infliction of mental suffering in the amount of $100,000. As the employer, Wal-Mart was ultimately responsible for the damages award against Pinnock. While there have been a few extremely high punitive damages awards under Canadian law, they are the exception to the rule. Needless to say, Wal-Mart appealed the decision.

The Appeal:

The Court of Appeal conducted an analysis of the different types of damages. Among other things, it confirmed that aggravated damages are intended to be compensatory, whereas punitive damages are intended to punish the wrongdoer. It also confirmed that “if the award of punitive damages when added to compensatory damages, produces a total sum that is so ‘inordinately large’ that it exceeds what is ‘rationally’ required to punish the defendant, it will be reduced or set aside on appeal.” When the damages award against Pinnock was reviewed, the court felt compelled to reduce the $150,000 punitive damages award to $10,000, although the $100,000 award for intentional infliction of mental suffering was left in place.

A similar analysis was used when looking at the damages assessed against Wal-Mart. The $200,000 aggravated damages award was permitted to stand, and the $1,000,000 punitive damages award was then reviewed in conjunction with it. Ultimately, the court decided that “an additional punitive damages award of $1,000,000 [was] not rationally required to punish [Wal-Mart] or to give effect to denunciation and deterrence”, and it reduced the $1,000,000 punitive damages award to $100,000.

Boucher ended up with: (i) 8 months of pay (which was not the subject of litigation); $110,000 from Pinnock for intentional infliction of mental suffering, together with punitive damages; and (ii) $300,000 from Wal-Mart for aggravated damages, together with punitive damages. Ultimately, $1,040,000 in punitive damages was removed from the jury’s findings, thus bringing the decision back into the reasonable range of damages which we have come to expect from Canadian courts. A lesson still remains for employers however, which is that workplace investigations need to be performed thoroughly, objectively and fairly, and a price will be paid when managers are permitted to intimidate and harass the employees that they supervise.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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